Bitcoin plunges after breaking through $58,000! The reason is geometry? The Bank of Japan's interest rate hike may revive the crisis!
Bitcoin price has experienced significant volatility, especially after breaking above $58,000 before experiencing a rapid pullback. It is currently trading between $56,000 and $58,000. At the time of writing, the price of Bitcoin was at $56,962, with the 24-hour increase narrowing to 0.54%.
There are two main reasons:
One is the yen carry trade. To put it simply, investors take advantage of Japan's low interest rate environment and borrow Japanese yen to invest in high-yielding assets, such as U.S. stocks. However, as Japanese economic data improves, the market expects that the Bank of Japan may raise interest rates, which increases the cost and risk of yen carry trades.
Once the Bank of Japan really raises interest rates, or the market expects to raise interest rates, investors will close their positions one after another, causing asset prices to fluctuate, and Bitcoin will naturally be unable to survive alone.
Second, the Fedâs interest rate cut expectations cannot be ignored. If the Fed decides to cut interest rates, the U.S. dollar will likely depreciate, while the yen will appreciate relatively. For yen carry traders, this means more dollars are needed to convert back into yen, increasing pressure to close positions.
This pressure could lead to a sell-off in the market, further impacting the price of risky assets such as Bitcoin.
In summary, this decline in Bitcoin is a direct reflection of changes in the global macroeconomic environment. When making investment decisions, investors need to pay close attention to the policy trends of global central banks and their impact on market sentiment and asset prices.
